European shares eke out gains as Sodexo, banks jump

LONDON (Reuters) - European shares were flat to slightly higher on Thursday, paring gains as a rally following the U.S. midterm elections sputtered while strong results from SocGen and Commerzbank and France’s Sodexho soothed concerns about corporate earnings.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 29, 2018. REUTERS/Staff

The pan-European STOXX 600 was up 0.3 percent at 1017 GMT, extending the previous session’s gains. In early dealings, it had hit its highest since Oct. 10.

Investors shrugged off news that UBS (UBSG.S), Switzerland’s largest bank, faces another potentially costly legal battle as the U.S. Department of Justice draws up civil charges over the sale of mortgage-backed securities in the run-up to the 2008 financial crisis.

The bank has said it will contest any complaint vigorously.

Analysts at Zuercher Kantonalbank reckon more than half of the 1.2 billion Swiss francs ($1.20 billion) UBS has set aside for non-core legal risks was dedicated to the U.S. case.

“UBS was one of the most high profile banks that hasn’t suffered from DoJ investigation. It was one of the smaller issuers, which is may be why the DoJ has probably left them til last,” said CityIndex’s Odeluga.

Sodexo (EXHO.PA) was flying high after the world’s second-biggest catering company’s better-than-expected revenue. Shares in jumped 6.4 percent to their highest since March and on track for their best day since July.

Hikma Pharmaceuticals (HIK.L) rallied 6.6 percent after raising its full-year revenue outlook for the injectibles division, its largest unit.

It wasn’t all good news though. Shares of broadcaster ProSiebenSat.1 (PSMGn.DE) plunged 15 percent to the bottom of the STOXX 600, hitting lowest level in more than six years after cutting its dividend and warning on its full-year outlook.